KARACHI: Digital payment services provider Keenu has announced its management buyout, which took place last year.

One of the larger players, Keenu, has about a quarter of the market for point-of-sale (POS) after Habib Bank Ltd, according to estimations by Data Darbar based on the latest available data from annual reports. When Keenu entered the market, it was the first non-bank company doing POS and, hence, partnered up with Bank Al Habib.

“We have tapped only five per cent to 10pc of the POS industry,” says acting CEO Saad Niazi, who has worked for Keenu for over a decade as the chief operating officer.

Keenu is basing its future trajectory on the promise of Raast Person-to-Merchant service launched by the State Bank of Pakistan (SBP) in December last year. The P2M service is intended to allow merchants to accept payments through Quick Response (QR) Codes, Raast Alias, IBAN and Request to Pay. Merchants and e-commerce players are to accept payments through Raast P2M by the start of April this year.

“With the advent of Raast P2M, there is a lot of potential going downstream,” explains Mr Niazi. “Until now, we were tapping tier I merchants, but we believe there is much more potential with hundreds of thousands of tier II merchants.”

Globally and in Pakistan, tier I merchants account for only 8pc to 10pc of the POS of the market; the rest are the lower tiers, he says, explaining market potential.

But why would merchants choose to be digitised and thus part of the formal economy that pays taxes?

“Not being digitised is a perception related issue,” says Keenu’s CEO. Merchants think they will save taxes by staying out of the informal net. They need to be educated on the advantages of being part of the formal economy, the foremost of which is access to bank credit, he elaborates. A small shop will remain small without access to finance from formal institutions.

Given pressures from the International Monetary Fund and the state of the economy, there is an increased drive by the central bank, Federal Board of Revenue, and other revenue authorities to focus more on formalising small retail businesses. With pressure from the law and the existence of beneficial solutions, Keenu believes it can increase market penetration.

Published in Dawn, February 16th, 2024